A quick rundown of the 8 most common ways retailers approach expansion.
With many retailers already saturating mature markets, it’s no surprise that so many are shifting their focus to expand operations and enter new markets. Barely a day goes by without another brand announcing retail expansion plans, whether that’s entering a new market, implementing an omnichannel approach, bolstering supply chains, opening stores in new cities, or doubling down on cross-border e-commerce. Here’s a quick rundown of the 8 most common ways retailers approach expansion:
Even the most robust expansion plans will fail if you don’t prime the finance team to handle the back-end accounting. Retailers struggle to achieve their goals when a financial backbone isn’t in place. Much of this is down to prioritizing the more exciting aspects of financial transformation, such as your omnichannel presence and failing to spend adequate time and money on the less glamorous parts of the expansion puzzle.
Constantly adding new things without building the required financial capabilities may leave your brand crippled by fines for various compliance standards, making significant decisions based on inaccurate reports, and struggling to get complete visibility of operations. All this leaks into the customer experience, with supply chains breaking down due to delayed payments, invoices arriving late, and stressed finance teams trying to find the capacity to deal with payment issues.
Retailers need to invest in financial transformation before hitting expansion mode. This blog approaches expansion with your finance team in mind. Let’s look at the tools and processes you need to have in place before you make your next big move.
Before you act, you must examine. Why not give your finance function a health check? You need to take a long hard look at your financial systems and processes. Adding a higher volume of work to under-pressure systems is rarely wise. So you will need to have full awareness of your current capacity.
Accurately determining where your finance team will face bottlenecks should be the first step in any retail transformation and must involve accounting team members. Leaders need to ask as many questions as possible during this phase.
At this point, most retailers will begin to identify the need for more robust systems to handle any future expansion. Check out our resource on building an ERP requirements checklist list to help you assess your specific needs.
Before you make any steps towards expansion, why not consolidate data and insights from across your organization so that you can make genuinely data-informed decisions about how best to grow operations.
Brands have more information at their fingertips than they realize, and it requires a truly agile approach to tap into that wealth of knowledge.
Speak to all departments, perhaps the marketing team is aware of demographics that aren’t on finance’s radar, or maybe the legal team knows about the difficulties of operating in a market that looks red-hot based on website hits. Understanding all the data you own will help you answer some of the many questions that expansion involves.
Retailers are usually brimming with knowledge about the ubiquity of WeChat in China or the popularity of mobile eCommerce in Brazil. Yet very few brands are aware of the nuances involved with accounting across borders. Before your team gets too excited about retail expansion in a new market, breaking down the financial reporting requirements in new jurisdictions is essential.
You’ll find that accounting regulations can shift in new markets and that remaining compliant with global accounting standards will save your brand from hefty fines and reputational damage. Even if you intend to stay in the same market, expansion may include adding subscription services, building a robust e-commerce channel, or opening a new store. It’s vital to understand all financial regulations governing these actions.
One of the biggest challenges retailers face when expanding is partnering with the right companies. Many large brands don’t allow their solutions partners to share their information, so you may need to speak directly with software consultants and their partners to determine their experience in your industry. Look for teams and consultants that understand the nuances of the retail landscape.
Once you get chatting, they’ll be able to make relevant recommendations. Once you speak to them, it will be evident if they’re aware of the challenges posed by retail expansion and whether their solutions can support your growth. Even if they can’t share the names of brands they work with, they will be able to provide relevant information based on their industry experience. Speaking with others about their experience partnering with the company should also be possible.
According to estimates, every 39 seconds, a data breach occurs in the United States. As a result, companies tend to put a lot of the focus on security on their customers’ data protection. However, they equally need to invest in appropriate back-end protection of all financial information.
The average cost of compliance has skyrocketed in recent years, with data breaches becoming part of the new normal. Not only do these breaches cost retailers hefty amounts through fines and legal fees, but they do considerable damage to reputations in new markets.
Often, retailers work between disparate systems, managing leases and recurring billing on separate databases. Not only does this make it hard to get visibility of your financial situation, but audits and proving compliance can be cumbersome. Not to mention the fact that this kind of set-up results in moving spreadsheets and critical financial information between systems to consolidate finances, leaving your brand vulnerable to attacks.
Critical to any successful retail expansion journey will be implementing centralized accounting systems and ERPs. These allow your finance team secure and controlled access to all your financial information. It’s just a matter of investing in robust, scalable solutions that can keep all your financial information safe as you grow.
Work with ERPs that allow for enhanced features. For instance, Microsoft Dynamics ERPs will enable you to add any functionality you need to handle leases through its network of partners. Out-of-the-box solutions such as Property Lease Management, Multi-Entity Management or Subscription Billing Suite give your team advanced accounting solutions within the secure interface of your ERP. To find out more about what to look for in an ERP, check out the ultimate guide to choosing an ERP for your transformation.
